When considerable overlap occurred between inflation and recession in the last half of the 1970s and early 1980s, the Fed responded by

A. keeping interest rates high.

B. pursuing a rapid expansion of the monetary base.

C. pushing interest rates down to near zero.

D. adopting a policy of inflation targeting.

Question

Business

Hayley Barajas

28 August, 20:54

When considerable overlap occurred between inflation and recession in the last half of the 1970s and early 1980s, the Fed responded by

A. keeping interest rates high.

B. pursuing a rapid expansion of the monetary base.

C. pushing interest rates down to near zero.

D. adopting a policy of inflation targeting.

+1

Answers (1)

Know the Answer?

Oliver Robertson · Answer 1

A. keeping interest rates high.

Explanation:

In the late 1970s. The rate of inflation was very high, exceeding 10% in 1979 and 1980, so the Federal Reserve used tight monetary policy to raise interest rates, with the federal funds rate rising from 5.5% in 1977 to 16.4% in 1981.